In case of default of such a company, the market will expect similar events that happened after the bankruptcy of the American bank Lehman Brothers in 2008.
The Chinese economy has nearly 300% of GDP in debt and is already on the verge of its first corporate crisis
Evergrande, the second largest construction company, will also default after reaching 1.97 trillion yuan ($ 305 billion) in debt.
Amid this news, two of Evergrande's largest creditors have already demanded immediate debt repayment.
Last Friday, Evergrande securities were removed from the repo market by the decision of the national clearing center CSDC. Panic among investors was also caused by the inability to pledge the company's bonds and receive financing for them.
Evergrande's credit rating was downgraded by the national agency Chengxin, which caused the company's bonds to plummet on Monday, leading to the suspension of trading in the security.
It is worth noting that the bankruptcy of Evergrande will lead to noticeable shocks in the financial sector, social sphere, the real estate market and everything connected with it.
Last week, the international rating agency Moody’s downgraded the outlook for Chinese developers to “negative”, citing falling sales, liquidity risks and a snowball of debt, which is becoming increasingly difficult to refinance.
In the first half of 2021 alone, in the Chinese market, 25 companies defaulted on bonds totaling $ 9.67 billion. This is the highest figure in the history of the market.
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